Tesla Beat Q1 Estimates, Expects Significant Deliveries Growth Ahead

  • TSLA.us
    (${instrument.percentChange}%)

Q1 Financial Results

Tesla (TSLA) released its financial results for the first quarter of the year on Wednesday after market close, which showed Revenue growth of 81% year-over-year, to $18.756 billion. This was driven partly by increased vehicle deliveries and higher average selling price. [1]

The firm also achieved record Operating Margin of 19.2%, from 14.7% in the previous quarter, which is no small accomplishment, given the rise in commodity and energy prices, following the war in Ukraine and high inflation. During the earnings call, Mr Musk expressed his thought that "the official numbers actually understate the true magnitude of inflation". [2]

Deliveries & Production Outlook

Tesla Motors Inc had already announced record deliveries of 310,048 in Q1, while production had posted a small decline over the previous quarter, to 305,407.

The company expects 50% average annual growth in vehicle deliveries over the next years, while during yesterday's earnings call, mr Musk said that for 2022 "it seems likely that we'll be able to produce over 1.5 million cars". This would be more than double compared to 2021, when it handed over 936,172 vehicles. [3]

In terms of production, he sees similar growth, noting that "we remain confident of a 50% growth in vehicle production in 2022 versus '21. I think, we actually have a reasonable shot at a 60% increase over last year".

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New Factories & Headwinds

The king of the electric vehicle (EV) market, opened two new factories recently, in Germany and in Texas, having delivered the first Model Ys produced in those plants.

However, production in the firm's main export hub, the Shanghai, China factory, was temporarily halted recently, due to the surge in Covid-19 cases. This shutdown led to a loss of "about a month of build volume", but production is already resuming "at limited levels", as per the Chief Financial officer Zachary Kirkhorn.

This will affect second quarter production levels, which CEO Elon Musk noted that will be "similar to Q1, maybe slightly lower", but stressed that "Giga Shanghai is coming back with a vengeance".

Tesla acknowledged that supply chain issues and chip shortages have persisted and have weighed in factory activity, but it has been navigating through those issues more successfully than most of its competitors.

Robotaxi & FSD

Earlier in the month, in the Texas Cyber Rodeo event, Tesla's CEO had teased a Robotaxi, on which he offered a few more hints yesterday. He described it as a "powerful product" and aims to reach volume production in 2024, while noting that it will have very low cost per mile.

In regards to the full self-driving (FSD) program, he acknowledged significant challenges, saying that "of any technology development I've ever been involved in, I've never really seen more kind of false dawns or where it seems like we're going to break through, but we don't, as I've seen in full self-driving".

Despite those challenges, Tesla Motors Inc still expects to release the Beta version to all US customers by the end of this year.

The Musk-Twitter Saga

In the latest episode of this ongoing story, the Tesla CEO had made a bid to acquire 100% Twitter for $54.20 per share and take it private [4]. Twitter, which releases its Q1 financial results on April 28, would consider the unsolicited offer, but also announced a Right Plan [5] that would make a hostile takeover hard, commonly referred to as "poison pill".

Mr Musk posted some cryptic tweets after that, like the "Love Me Tender" one [6], potentially a hint to a tender bid, but during yesterday's earnings call he did not refer to the matter.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 21 Apr 2022 https://tesla-cdn.thron.com/static/IOSHZZ_TSLA_Q1_2022_Update_G9MOZE.pdf

2

Retrieved 21 Apr 2022 https://www.youtube.com/watch

3

Retrieved 21 Apr 2022 https://ir.tesla.com/press-release/tesla-q4-2021-vehicle-production-deliveries

4

Retrieved 21 Apr 2022 https://d18rn0p25nwr6d.cloudfront.net/CIK-0001418091/aa412090-b7e5-470b-bfea-35d48c913951.pdf

5

Retrieved 21 Apr 2022 https://www.prnewswire.com/news-releases/twitter-adopts-limited-duration-shareholder-rights-plan-enabling-all-shareholders-to-realize-full-value-of-company-301526627.html

6

Retrieved 28 Jun 2022 https://twitter.com/elonmusk/status/1515405264740134918

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